Monday, November 19.
The trading week started with a busy session in Asia with Japanese data on tap. The Adjusted Trade balance showed an improvement in the surplus with more growth seen in imports rather than exports, which is not the typical situation for the export-oriented Japanese economy. The overall trade balance fell to -449B, and that news pushed on the demand for PUT options for USD/JPY currency pair. The Nikkei 225 stock benchmark was also under the selling pressure. Bank of Japan Governor Kuroda hosted the press conference where he underlined the need of the same supportive measures by keeping the interest rates at the low levels. However, the Japanese Yen strengthened as the safe-haven asset. The rest of the economic calendar was almost empty with a couple of exclusions. German Monthly Buba report showed an increasing uncertainty in the largest economy in Eurozone, adding pressure on EUR/USD. In the United States, FOMC Member Wilkins spoke, avoiding sharp topics about the monetary policy. Monday was not volatile for other currency pairs.
Tuesday, November 20.
Australian dollar started its plunge on Tuesday, right after the Reserve Bank of Australia reported its meeting minutes. The statement was not as hawkish as the Aussie bulls were hoping for. The regulator officials expressed concerns about the economic growth, stating that the next tightening is under a big question and it’s more data-dependant. NZD/USD followed its neighbour as the market players were mostly buying PUT options for AUD/USD. The demand for PUT options was also persisted for USD/JPY pair which reached support levels below the significant technical mark of 112.50, charting weekly lows around 112.30. However, the bulls stepped in and the pair bounced off the low levels. European trading session was much more active with a number of important reports and headlines on cards. So, German Producer Price Index was published in line with the expectations (3.3% YoY and 0.3% MoM). The European Union Finance Ministers gathered for a meeting, discussing the situation with Italy which exceeded the budget deficit norm for European countries. Discipline measures announced with 2-weeks term for the European Commission to impose sanctions, however, Italian officials are not going for a compromise, increasing tensions with the EU. That’s a negative factor for EUR/USD and the pair kept charting new fresh lows. Bank of England Governor Carney spoke during the Inflationary report hearings in London. The regulator did not support the Sterling bulls with the fundamental side of things, underlying the uncertainty due to the Brexit issue. GBP/USD remained under the pressure from buyers of PUT options across the boards. The U.S. dollar gained strength versus the majority of currency basket in New York after the stock indices continued falling. Tech shares were leading the losses with a sharp sell-off in NASDAQ benchmark. Housing data in the United States improved in October, however, that was not the main factor driving the demand for CALL options for USD.
Wednesday, November 21.
One of the most important headlines for emerging markets was the inflation report in South Africa, especially in the scope of an upcoming meeting and rate decision by the local central banks. The data showed a slow down in the inflationary pressures, however, USD/ZAR kept falling on the expectations that the regulator will hike the interest rates. The European economic calendar was empty on Wednesday, while the U.S. reported durable goods orders for October. All the components of the report were in red, showing a slow down in growth. Moreover, the downside revision of the previous period left a bunch of questions regarding the largest worldwide economy’s growth pace. Stock indices kept plunging. Crude oil inventories in the United States showed another week of growth which is definitely a negative outlook for the price of oil. WTI Crude fell again on demand cut, oversupply issues and output growth in the U.S. OPEC members do not show an ability to agree on the production cut so far and that situation weighs on traders who kept buying PUT options for the black gold last week.
Thursday, November 22.
Despite the holidays in Japan and the U.S., Thursday’s price action was rather volatile. Nationwide Core CPI in Japan was published in line with the expectations and USD/JPY was seeking direction in the roller-coaster trading session. ECB published Account of Monetary Policy Meeting. Some of the economic projections are negative for the Eurozone and if ECB cut the economic outlook during the next meeting, the start of the tightening cycle might be postponed. EUR/USD charted new lows on that expectations. The UK Prime Minister May spoke on Thursday about her plan for the Brexit deal. The vote in British Parliament is expected and that uncertainty weighs on the Sterling traders. Despite the pressure, GBP/USD had a bullish spike on Thursday with traders buying CALL options for most of the British pound pairs.
Friday, November 23.
Friday was a huge day for the European calendar. German gross domestic product report met the analysts’ consensus, while French, German and EU Purchase managers index fell in October. Manufacturing, Services and Composite components of the PMI report were also negative and that only adds pressure on the single European Currency. Canadian reports were supportive for the Loonie, however, oil price lost the ground on Friday and USD/CAD was moving in a completely opposite direction to the fundamentals. Despite the Consumer Price index and retail sales grew in Canada, BoC will face difficulties in their hawkish decision to hike the interest rates, as the Canadian economy might be hurt by the falling oil prices.